Commissioner of Income Tax vs LAKE PALACE HOTEL

BY THE COURT

The Tribunal, Jaipur Bench, Jaipur has made reference u/s 256(1) of the Income Tax Act to this court seeking opinion on the following question of law :

"Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in holding that the hotel business is an industrial undertaking and, therefore, the assessee is entitled to investment allowance u/s 32A of the Income Tax Act, 1961 ?"

The respondent-assessee claimed investment allowance u/s 32A, which was not allowed by the assessing authority on the ground that the hotel business was not entitled to investment allowance as it was not a industrial undertaking. The Commissioner confirmed the views of the assessing officer. The Tribunal allowed the deduction allowance following the earlier decisions given in the assessee''s own case. The Hon''ble Apex Court in The Indian Hotels Company Ltd. and Others Vs. The Income Tax Officer, Mumbai and Others, has held that in order to claim investment allowance u/s 32A, the requirement is that the assessee-company must be engaged in the business of manufacture or production of any article or thing. The court further held that in case of preparing food packets for selling the same or preparing the foodstuff for serving the hotel, there is no question of manufacture or production.

Thus, the question referred stands answered by the decision of the Hon''ble Apex Court in Indian Hotel''s case (supra). Accordingly, this reference is answered in favour of the revenue and against the assessee.

OPEN